WASHINGTON - The Treasury Department released a long-awaited study yesterday on overhauling corporate tax laws, detailing several options but making no recommendations.
The 116-page report laid out broad approaches to policy and discussed advantages and shortfalls of various proposals.
Treasury officials, however, said they did not expect any legislation to pass Congress next year given the complexity of the issue and the fact that President Bush will be in his final year in office.
One approach discussed in the report would lower the current corporate tax rate of 35 percent to 28 percent by eliminating various business tax breaks. The study said the rate could drop to 31 percent if a decision was made to retain the current break for accelerated depreciation of business investments.
Another idea would replace the corporate income tax with a business activity tax, similar to a consumption tax on businesses. The report also looked at issues such as the system of taxing corporate profits.
The review of corporate taxes began this year under Treasury Secretary Henry Paulson, who has complained that rates are too high and are hurting the global competitiveness of US companies.
Bush suggested to reporters in August that his administration might try to win approval in Congress for legislation to cut corporate tax rates. But the Treasury's lack of specific recommendations was viewed as a strong signal the administration has given up on overhauling corporate tax laws before Bush leaves office.
Bush and other Republicans have pledged to reject any tax increases for individuals and corporations, and to fight to make permanent his first term tax cuts. They are scheduled to expire at the end of 2010.
Democrats, including many of the presidential candidates, contend those cuts were skewed to the wealthy. Democrats have said they want to roll back the cuts received by people in the top brackets and retain relief for low- and middle-income taxpayers.
Representative Charles Rangel, a New York Democrat, said yesterday he still believed changes to corporate tax laws were possible next year.
Rangel, chairman of the House Ways and Means Committee, introduced legislation in October that would shift $1 trillion of the tax burden over 10 years. The proposal would repeal the alternative minimum tax while reducing taxes on 90 million mostly lower- and middle-income people and raising taxes on the wealthiest.